Apple: Best Company in the World?

The evidence is pretty clear to me, Apple is the best company in the world. If there was a hall of fame they would be the first inductee. Their computers, iPhones, etc. are arguably the best products in the world. But on the flip side of that, from what I can tell, they are the best in the world at tax avoidance. Whatever you think of their products, that’s a one, two punch that’s hard to overlook.

NEW YORK-JULY 24 – The Apple logo on the glass of the Apple Store, Fifth Avenue on July 24 2015 in Manhattan.

One of the biggest costs any Global company has to deal with is tax. There’s 50 different states and 200 different countries with different tax rates. Apple has been the absolute best at avoiding overseas tax (& state tax) since Jobs returned to Apple in 1997. Maybe longer.

Their overseas tax has essentially been zero for the entire time. They manage that with the techniques we describe in the following services on our website: Intellectual assets, interstate taxation & international taxation. That isn’t a coincidence. Ever since I saw a GAO article about multinationals paying less tax at lower rates than privately owned businesses, I have been studying Apples & other multinationals’ tax practices. Obviously, they are not advertising this stuff, but every now and then something happens that allows me to see behind the curtain. This article resulting from a leak of secret documents from Apple’s attorneys is one of them.

Their famous Double Irish with a Dutch Sandwich cut foreign sales outside the U.S. to zero tax until 2015. That arrangement became public in 2013 when Congress held Congressional hearings and Ireland was forced to alter their taxation practices. They restructured their tax strategies in 2014. If something happens again, they’ll restructure yet again. There’s too much money on the table to be lackadaisical about it.

Note. Apple’s Irish subsidiaries claimed that almost all of their income was not subject to taxes in Ireland or anywhere else in the world. And rightfully so. They were right. The Irish government agreed with them. They did nothing wrong. No charges were ever brought. But the EU got involved and Apple had to abandon the Double Irish tax strategy for (an island of Jersy) tax strategy.

This is about as important as it can get. Without out the billions they saved in overseas tax, Apple would never have become the most valuable business in the world. Neither would Google, Facebook, Caterpillar, etc. have achieved their massive valuations. I refer to Apple and other multinationals as businesses rather than a companies, because each of them have multiple companies under their umbrella. No multinational is a single company.

A leak of secret corporate records reveals some interesting things. By quietly transferring trademarks, patent rights and other intangible assets to offshore companies, global businesses cut their tax bills dramatically. Also, Apple’s attorneys mailed 14 questions for their attorneys’ offices in the Cayman Islands, the British Virgin Islands, Bermuda, the Isle of Man, Guernsey and Jersey, asking them to “confirm that an Irish company can conduct management activities . . . without being subject to taxation in your jurisdiction.” Apple also asked for assurances that the political climate would remain friendly: “Are there any developments suggesting that the law may change in an unfavorable way in the foreseeable future?”

For more interesting tax information you probably don’t know, visit our website [https:/] or our blog [https:/].

We do the same things, absent agreements with tax jurisdictions for privately owned companies. If you qualify, you could save hundreds of thousands of dollars a year. Or, if you’re not that big, you could save thousands or tens of thousands of dollars. Apple saved billions.



Run For Cover

Senate pushing tax reform. May sound good, but whenever there’s tax reform, taxpayers lose.

Tattoo that on the back of your hand.

“This will be the biggest tax bill since Reagan’s 1986 tax act.” Senator McConnell.

If you think Reagan was different, think again. Reagan gave us “passive activities”, “at risk” rules & all kinds of things that limited legitimate deductions. That was part of their broad brush approach to tax shelters. It’s true, tax shelters are no more. But that’s not the only thing that died with the 86 tax act. Rental real estate went from a terrific “deduction” to a “nothing” kind of thing limited to $25,000 in loss deductions. And it wasn’t even a tax shelter. It was just something ordinary Americans could do.

The politicians I’ve named are all Republicans.

Calling those lying *#y#k*s will probably not do you much good, but you might as well give it a try. Tell them to keep their hands off the tax code.

I haven’t written about the tax code much on here, but in my opinion, it’s a thing of beauty. Not that anyone designed it that way. It just turned out that way. I’m writing a paper on that subject right now and I’ll make it available here should I ever get it done. It gives a true artist tons of alternatives for cutting your income tax to the legal minimum. If Congress does reform taxes, you’ll be sorry. All the good stuff will go away in favor of a flatter tax with fewer deductions and fewer alternatives.

Then we’ll have to fight it out in court because that will be a violation of Glenshaw Glass and the 16th amendment. But that’s a story for another time.